easy · FRM Part 2 Operational Risk
An operational resilience framework sets an 'Impact Tolerance' for payments.
How does a KRI support this tolerance?
- The KRI acts mainly as a lagging count of how many times the tolerance has already been formally breached in the past.
- The KRI is used instead to calculate the annual insurance premium the firm pays under its cyber and payments-outage coverage policy each year.
- The KRI replaces the impact tolerance entirely, so the firm no longer needs to define one in its regulatory report to supervisors.
- The KRI monitors leading triggers (e.g., system latency) that suggest the firm is approaching its maximum tolerable disruption level.
Sign up free to see the explanation and track your rank →
More FRM Part 2 Operational Risk practice
- Which of the following describes the 'One Big Loss' principle for heavy-tailed (subexponen
- In the Bow-Tie analysis framework, where do 'Preventive Controls' sit relative to the oper
- A customer consistently deposits $9,800 in cash at three dif… — This behavior is a classic
- The Standardized Measurement Approach (SMA) formula is composed of two primary factors: th
- What is the regulatory treatment for 'Boundary Events' regarding capital requirements unde
- In the Standardized Measurement Approach (SMA), the Business Indicator (BI) serves as a pr
- Under a proper governance framework, 'Model Limitations' must be:
- If the bank had a poor loss history (LC > BIC), what is the impact on its capital?